The saga of 100 Investments v Walker

an act of deceit

A number of years ago, more than I care to remember, I was served with a statement of claim from a company known as 100 Investments Limited and three other companies.  The companies wished to attack the litigation funder who had funded my claim against PwC which took five years to resolve. The complainants, 100 Investments and the others, had to sue me to establish an accessory claim against the litigation funder.  The accusation is that I breached the highest level of duty possible, a fiduciary duty, and the funder assisted me in my breach.

 After interminable skirmishes the latest judge, there has been several, was determined to bring the matter to hearing.  Full battle commenced accordingly.  One of the processes in litigation that makes it spectacularly expensive is discovery whereby both parties exchange documents of relevance to the claim whether favourably or, crucially, unfavorably.  Discovery is laborious, particularly where there is a vast collection of documents as is the case with 100 Investment’s claim.  The opening to the hearing brought to the fore an incident which shows the centrality of proper discovery.

The background is that I was a liquidator of PVL. PVL had been the fiefdom of a delinquent named Henderson. He was bankrupted for his role in millions of losses by a variety of people.  Henderson had guaranteed hundreds of millions of PVL’s debt when he had no ability to pay. For 12 years he was banned as a director one way or another.  He was also specifically banned from giving guarantees. 

During the preliminary skirmishing in the 100 Investments matter the depression I had suffered for years reached a crisis point and deteriorated into what used to be called a nervous breakdown.  Having run out of money and having been blacklisted by my insurer I was left to defend myself.  I wrote a memorandum to the judge explaining my psychic state including suicidal ideation.  Despite the document being embargoed and having no official role, given the banning orders, Henderson was given a copy of the memo which he promptly gave to NZICA to pile on top of an obsessive series of complaints about me.  In an unconscionable act NZICA suspended me.  The effect was to deny me a licence to practice insolvency.  The office of liquidator fell vacant.  To its eternal shame the relevant Ministry allowed Henderson to select a replacement.  Hence a man named Whitley became the liquidator in my stead.

Whitley from the outset aligned himself with Henderson.  He immediately appointed Henderson’s “go-to” barrister as his counsel.  Moss is his name and for a dozen years now Moss has made my life hell.  There are dark accusations of financial impropriety, cold-blooded venality and obsessive conduct.  None of it is true and, indeed, is self-contradictory.  It is inconceivable that he should represent Whitley.  Whitley has an absolute binding obligation to be independent where the meaning of independent is the same as that which applies to judicial officers.  Independence in that sense has two limbs.  It necessitates actual impartiality, independence of mind.  It also imposes an even higher standard which is that the professional appears to be impartial, the appearance of independence.

The degree to which Whitley has failed the test of independence was evident in his stance towards me.  Much of Henderson’s and Whitley’s communications have been ruled privileged, meaning they are denied to me on the basis that they are preparatory measures for litigation.  To appeal to preparatory privilege is a kind of implicit confession.  Even before he started the liquidation, he had already resolved to sue me.  Independence for accountants is founded upon the notion of professional scepticism.  In the simplest case if a person tells you that they have $1 million in the bank, ask the bank for corroboration.  If a person tells you something about another, ask the second for their view.  To contemplate litigation against me from the outset is the very essence of partiality.  I said to him at the court that it was incomprehensible he failed to talk to me.  His rueful response was that hindsight is a wonderful thing.

More starkly indicative of his compromised independence is his absolute reliance on Henderson as his paymaster.  The relationship between the two was shrouded in mystery until last week.  Whitley has taken on enormous risk given the possibility of an adverse cost award.  It seemed reckless to our lawyers that he would take on such a mountain of risk without having some degree of formal assurance.  The question was put to Henderson as to whether there was a formal written agreement between Henderson and Whitley.  He answered with an emphatic and unequivocal “no”.

That line of examination was in the morning on Monday last week.  Whitley took the stand in the afternoon.  One of the barristers said to him that it was possible he may be facing $0.5 million in adverse costs.  He was then asked about his personal ability to pay.  Having established the backdrop of mountainous risk Whitley was asked if had an indemnity to which he replied “of course I have”.  A more direct contradiction in evidence is not possible.  The examination continued with questions about the character of the indemnity and, more pointedly, why it had not been discovered.  Whitley had no answer to this line of questioning other than to blame his lawyers.  He did add that he felt secure as a form of encumbrance had been imposed on Henderson’s apartment in Christchurch for Whitley’s benefit.

The barristers then demanded the agreement be delivered forthwith.  It was provided overnight.  In terms of court process this turn of events could not be a more gross breach of lawyerly obligation.  The prime imperative of the lawyers’ rules of conduct is fidelity to the court.  That duty over-rides the lawyer’s duty to his or her client precisely for the reason brought into stark relief by this particular act of deception.  Once the document was provided the depth of the deceit became apparent.  To begin with the document served more than one purpose.  It not only guaranteed Whitley against any contingency such as an adverse cost award, it also took the form of a funding agreement.  It committed Henderson to funding the actual costs of the liquidations being primarily two sets of litigation one in Auckland and one in Christchurch.  Extraordinarily Whitley, when confronted with the actual funding commitment, said he did not appreciate that is what the instrument did.  He said he could see that it was so now that he had a second look but did not see it before.  Then the third aspect was that the signatories to the document were two directors of a company acting as trustee to the Henderson family trust and by Henderson himself.  The obligation of the two directors was limited to the property of the trust.  But Henderson’s commitment was unlimited which meant he had given a personal guarantee and that, as will be seen, is crucial.  Finally, the witness to Henderson’s signature was Moss. Thinking about the prime imperative his involvement is critical.  Plainly, Moss could not claim be was oblivious to the existence of the document.

At that point day’s end had been reached.  The hearing was due to resume on the following day but the judge was ill so the it was not until Friday that it began again.  The barristers had by then done their work.  The initial set of questions posed to Henderson were designed to get him to admit perjury.  He did.  He apologised and claimed he forgot.  He was then led through a series of emails, eight in total, in which various drafts of the agreement had been exchanged between Henderson, his solicitor and Jai Moss in some role that was not entirely clear.  Henderson was then confronted with an affidavit he had sworn about six weeks before in which he described having searched diligently through his emails looking for relevant documents.  He could not explain how he had missed it or forgotten about it.  It was, of course, demonstrably nonsense that he had forgotten or overlooked it.

A second barrister then rose to his feet and referred Henderson to 2016 court order that banned him from managing companies.  There was a time limit on the managerial ban but there was the second ban.  Henderson was prohibited from signing guarantees in perpetuity.  The real reason for the duplicitous denial of documents subject to discovery was revealed.  Henderson needed to lie to conceal criminal offending and the mass ranks of lawyers he was paying had connived in the deception.  To be a lawyer in the Anglo-Saxon world is to have conferred upon you a privilege exclusive to that class of person.  With privilege comes responsibility, two sides of the same coin. The integrity of the legal system, and society more generally, depends upon rights not being uncoupled from obligation. 

RBW

12 March 2024